Government Budget: Objectives and Components

12 Questions

What is the main purpose of the Government Budget?

Reallocation of Resources, reducing income inequalities, ensuring economic stability, managing public enterprises, and reducing regional disparities

What are the two main types of receipts in the Government Budget?

Revenue receipts and capital receipts

How are revenue receipts different from capital receipts?

Revenue receipts do not create liability or reduce assets, while capital receipts either create liability or reduce assets.

Give examples of revenue receipts in the Government Budget.

Taxes and fines

What are the two types of taxes collected by the government?

Direct taxes and indirect taxes

What does tax revenue refer to?

Total of receipts from taxes and other duties imposed by the government

What is the main difference between direct taxes and indirect taxes?

Direct taxes are imposed on income and property, while indirect taxes are imposed on goods and services.

How does the tax burden differ between direct and indirect taxes?

Direct tax burden cannot be shifted, while indirect tax burden can be shifted to the final users.

What is the nature of direct taxes as income increases?

Direct taxes have a progressive nature as income increases, tax increases.

What is the coverage difference between direct taxes and GST?

Direct tax coverage is limited, with no tax for individuals with up to 7 lakhs annual income, while GST is applicable to everyone.

Provide examples of direct taxes and an indirect tax.

Examples of direct taxes include income tax and wealth tax, while GST is an example of an indirect tax.

What are some examples of non-tax revenue receipts?

Non-tax revenue receipts include interest earned on loans, government profits, dividends, fees, fines, escheat, forfeiture, special assessment, and gifts/grants.

Study Notes

The text discusses the importance of Government Budget and its objectives in managing resources effectively.
Government Budget is an annual statement outlining projected expenditures and receipts for the upcoming fiscal year.
The objectives of the budget include Reallocation of Resources, reducing income inequalities, ensuring economic stability, managing public enterprises, and reducing regional disparities.
To achieve these objectives, the government may impose taxes on harmful goods, provide subsidies to the poor, and focus on increasing GDP through effective policies.
The components of the budget include receipts (revenue and capital) and expenditures, where revenue receipts are recurring in nature and capital receipts are occasional and non-recurring.
Revenue receipts do not create liability or reduce assets, while capital receipts either create liability or reduce assets.
Examples of revenue receipts include taxes and fines, while capital receipts include disinvestment and recovery of loans.
Tax revenue and non-tax revenue are two types of revenue receipts that the government collects from various sources.- Tax refers to the total of receipts from taxes and other duties imposed by the government, collected in various forms such as toll tax, GST, and income tax.
There are two main types of taxes in the country: direct taxes (on income and property) and indirect taxes (on goods and services).
Direct taxes are imposed on individuals and companies' income and property, while indirect taxes are on goods and services.
Direct taxes have a progressive nature as income increases, tax increases, whereas indirect taxes like GST are proportional based on purchases.
Direct tax burden cannot be shifted, while indirect tax burden can be shifted to the final users.
Direct tax coverage is limited, with no tax for individuals with up to 7 lakhs annual income, while GST is applicable to everyone.
Examples of direct taxes include income tax and wealth tax, while GST is an example of an indirect tax.
Non-tax revenue receipts include interest earned on loans, government profits, dividends, fees, fines, escheat, forfeiture, special assessment, and gifts/grants.
Capital receipts increase the government's liability by borrowing money, recovering loans, disinvestment, and small savings.
Expenditures are categorized into revenue expenditure (daily recurring expenses) and capital expenditure (non-recurring expenses creating assets or reducing liabilities).